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These are some of the most frequently asked questions and observations we have from recent investor meetings: How long will Mega-cap Technology firms be able to spend capex on AI until the market forces them to show a return on their investment? Where are the AI profit pools? Technology investors discussing power When is it
When you meet with institutional investors all day for years, you realize increasingly that part of what makes the market is that money is managed in disparate and competing ways to meet the needs of a wide array of constituents. Passive money, high gross / low net “multi strats,” and quant money with three hour-to-two-day
US growth stocks have performed very well since the beginning of 2023. Large cap growth has performed in line with small cap growth in the risk-on tape. While some investors believe small caps and broadening will happen, viewing valuation as more attractive, we are skeptical. We investigate the case for small vs. large cap growth
Recently, when we meet with several Equity Capital Markets (ECM) investors, there were several comments about the challenges of pricing initial public offerings (IPOs) correctly. Most ECM investors have some trading rules about “Broken IPOs,” or IPOs that trade below their initial price. With that backdrop, we investigated float, valuation, profitability, and subsequent performance for
US growth stocks have performed very well since the beginning of 2023. Large cap growth has performed in line with small cap growth in the risk-on tape. While some investors believe small caps and broadening will happen, viewing valuation as more attractive, we are skeptical. We investigate the case for small vs. large cap growth
Recently, when we meet with several Equity Capital Markets (ECM) investors, there were several comments about the challenges of pricing initial public offerings (IPOs) correctly. Most ECM investors have some trading rules about “Broken IPOs,” or IPOs that trade below their initial price. With that backdrop, we investigated float, valuation, profitability, and subsequent performance for
During recent meetings, several investors questioned the sustainability of the recent market rally. Most did not anticipate market appreciation of this magnitude. There are three reasons the market continues to rally in our judgment. Firstly, financial conditions remain easy. Over the last 35 years, the Bloomberg Financial Conditions Index (below) has only been easier 8%
Many investors we speak with are having a strong year from a performance perspective. They are generating alpha, beating the S&P500 if they are long-only, or beating it even if they are long-short. Did investors finally manage to crack the code on outperformance and alpha generation? Probably not. More likely, size, style, substance, and momentum
Oil prices have been range bound for nearly two years, with surprisingly little volatility given some clear demand and supply disappointments. Energy stocks in the interim period have in some ways materially improved. The percentage of stocks that are in Trivariate’s highest quality substance quartile, we call “High Quality,” is now higher than the percentage of
